Arguably the biggest difference between federal market pros and amateurs is how they influence government contracts before the contracts are released (known as Shaping or Capture). There are lots of ways to Shape but one technique is to influence a contract’s NAICS code in your favor. Here’s an example:
1) A PR and marketing contract you are interested in is expected to come out in two years
2) Your average revenue is $21.5M
3) You don’t’ want to compete against large businesses so you want it to be set-aside for small businesses
4) But you don’t want the contract to have a NAICS code with a small business threshold lower than $21.5M (because then you won’t be able to bid on it)
5) So let’s see how different NAICS codes related to PR and Marketing will impact you:
As you can see in the table above 9 NAICS codes have some connection to PR and marketing. But the small business thresholds vary significantly.
NAICS in Red, you can’t bid: If the government assigns one of the NAICS codes in red, and sets the contract aside, then you’re in trouble because your revenue exceeds the small business size limit and you’ll be blocked from bidding (you can subcontract to another company that does qualify as small, but you won’t be able to prime)
NAICS in Orange are better: If the contract is given one of the NAICS codes in orange then you can bid (you’re under the size limit), but you’ll have to compete with companies that are significantly larger than you. For example, if the government uses NAICS 541830 (Media Buying Agencies) which has a size limit of 432.5M then you could be competing against companies that are about 50% larger than you.
NAICS in green are best: Under these NAICS you are just under the size threshold so you’re likely to be the biggest small business competing, and you’ll have blocked lots of competitors who are slightly too big, which is a great place to be
The impact: The NAICS assigned can be the difference between not being able to bid at all and being the largest fish in the pond.
How to influence the government: Influencing the government to use the NAICS code you want is easier said than done but it is a powerful tool and if you want to learn more see our class on Shaping HERE